U.S. Stock-Index Futures Tumble as Italian Bond Yields Surge

U.S. stock futures retreated, indicating the Standard & Poor’s 500 Index will snap two days of gains, as a jump in Italian bond yields signaled Europe’s debt crisis is worsening.

Adobe Systems Inc. tumbled 9.6 percent in Europe after the software company cut its earnings target. Yahoo! Inc. gained 0.9 percent as Alibaba Group Holding Ltd. and Softbank Corp. were said to be talking with private-equity funds about making a bid for the U.S. Internet portal.

S&P 500 futures expiring in December lost 2 percent to 1,247.3 at 10:27 a.m. in London. Contracts on the Dow Jones Industrial Average fell 191, or 1.6 percent, to 11,932.

“Italian bonds are within a very, very dangerous zone,” said Alberto Espelosin, head of analysis at investment company Ibercaja Gestion SGIIC SA in Zaragoza, Spain. “Any country paying more than 6.5 percent it just boosts financing costs and makes it hard to reduce deficits. There is high risk aversion and equity markets will reflect this.”

The yield spread between benchmark Italian 10-year bonds and German bunds reached 500 basis points for the first time since the euro was introduced in 1999, while LCH.Clearnet Group Ltd. increased the extra deposit it demands from clients to trade Italian government bonds.

“The big question that hangs on markets is how do you bring down the debt level for countries like Italy,” said Russ Koesteric, San Francisco-based global chief investment officer for the IShares unit of BlackRock Inc. “These are countries that can reform, but the challenge is that they need time to do this.” BlackRock oversees $3.3 trillion.

U.S. stock futures retreated, indicating the Standard Poor s 500 Index will snap two days of gains, as a jump in Italian bond yields signaled Europe s debt crisis is worsening.Adobe Systems Inc. tumbled 9.6 percent in Europe after the software company cut its earnings...